Earlier this summer, we wrote about the mutual benefits of supply chain visibility and orchestration – with value for both brands and their factories, mills, and suppliers that could be realised by closer collaboration and data connectivity between design, development, and production.
In the short time since that piece was published, those principles have been proven several times over. The logistics bottlenecks we referenced have become more pronounced, with significant impacts on the lead times and margin targets that brands and their partners need to hit. The possibility of some of the world’s largest brands facing product shortages is becoming real enough to gnaw at otherwise buoyant stock prices. And even the digital-native retailers that have been held out as being immune to the worst pandemic disruptions are needing to temper investors’ expectations as a continued cloud hangs over the resilience of their supply chains.
All of which is further evidence that, in a world characterised by unpredictability in both consumer demand and production capacity, visibility and mutual interoperability between those two variables is vital. Not only to manage the – hopefully- short-term disruption that COVID continues to impose, but also to prepare the fashion industry for a near-term future where agility, resilience, sustainability and other supply chain watchwords are unambiguously going to rely on the principles of supply chain visibility and connectivity.
And that visibility and connectivity have two components: the top-level orchestration we wrote about previously, and the foundation of that visibility, which starts with a level of connectivity, data capture, and communication from the factory floor that industry insiders know is currently the exception rather than the rule.
“Fashion today is very reactive rather than proactive, and channels between brands and manufacturers has remained resolutely analogue when it comes to communicating the progress of production,” explains Rakhil Hirdaramani, Director of manufacturing pioneers Hirdaramani Group. “A factory will share weekly or fortnightly updates with their brand and retail partners, comparing forecasted on-time delivery against actual on-time delivery, but by the time those conversations are being had, the opportunity to get ahead of change has passed. And as long as we keep communicating this way, brands are taking all of the hard work they put into design and development and essentially shutting their eyes until production is finished.”
As with many of the stories of disruption attributed to the pandemic, COVID may not have directly caused the negative outcomes of this lack of connectivity, but it has cast them in sharp relief as the fashion industry continues to move towards an on-demand model.
“When we have lockdowns, or periods of large-scale isolation, in Asia, we’re already seeing delays of several weeks across geographies as production comes to a standstill,” Rakhil Hirdaramani adds. “And because of the industry’s inability to respond to problems before their effects are felt, and because of the lead times involved in production, it becomes almost impossible to respond to those immediate crises. But what’s even more important is that factory capacity is typically loaded three months or more in advance, so what might be temporary disruptions in other industries become a snowball effect that cascades from one season to the next and translates into fewer sales. This is something that every brand and manufacturer in the world is dealing with to some degree right now, and unless they can create more capacity and agility, their options are severely limited.”
Many industries have been caught out by similar halts to production, of course, but to understand why fashion has felt particularly acute pressure, we need to understand precisely where that lack of visibility originates, and why.
For many brands, the processes of design, development, costing and sourcing have already been digitised to a greater or lesser extent. From initial concept through to the creation of technical specifications, in-house teams are working – or at least aiming to work – from a single source of common data. At the same time, commercial and sourcing teams are placing material orders, setting sustainability targets, planning timelines to market, and pre-booking production capacity.
These stages of the value chain are where brands have typically prioritised their technology investments, but as those processes have become increasingly digitised, it has also become apparent that there is a clear line beyond which that level of connectivity and data integrity stops: the point of execution. Within many – if not most – apparel value chains, the processes of production, from cutting to sewing to finishing, are a separate, entirely analogue and all but invisible track of work being performed by offline machinery. Brands are able to track the variables that count before manufacturing, and they assess the performance indicators that can be gauged afterwards, but as an order makes its way through the factory floor, it does so largely out of sight.
This is a compromise that the industry had learned to tolerate, but the disruption of the pandemic has highlighted that the smooth running of fashion relies heavily on increasing levels of collaboration for those hidden processes to continue uninterrupted – making a strong and sudden case for factory and even machine-level visibility as a strategic priority to drive improved end-to-end supply chain performance and resilience.
“The fashion industry had an ‘us and them’ mindset that had remained unchanged for a long time, until the brands that had invested in working more closely with their key suppliers to optimise production began to outperform the ones that hadn’t.” Rakhil Hirdaramani says. “Pre-pandemic that created a business case from competition, but with the accelerating effect of COVID, that conversation has now evolved to be one of business continuity planning as well. As a brand, you need to know that your manufacturers are going to be in business in three months’ time, and guaranteeing that cannot be the responsibility of the supplier alone, or the brand alone – it needs to be a collaborative effort that’s enabled by transparency and visibility. Historically, a brand might identify a particular supplier that had a defect rate of 10% per season, and since they had no way of identifying where and why those defects were occurring, the relationship between that brand and that supplier would deteriorate. The supplier would need to increase prices to compensate, pricing themselves out of the market, and the brand would find itself falling short of the expectations of its consumers or wholesale partners. Very quickly, the brand would decide it needed to place orders elsewhere, but when the next season arrived, the brand would need to bear the costs of switching and developing new relationships. Today, in relationships where visibility to the factory floor exists, both parties can instead talk about optimisation – working together to decrease defects and increase efficiency by an agreed percentage through the adoption of industry best practice processes, standards and technology. This supports fair and equitable decisions that drive mutually beneficial improvements in performance at the same time as avoiding the negative consequences of severing that relationship.”
This closer, more symbiotic relationship between brand and supplier is not something that brands will necessarily wish to develop universally, but as the emphasis in supply chain management shifts to resilience, agility and sustainability, the argument for building closer relationships with has become more compelling for brands of all shapes and sizes. The scope and scale of the investment brands and suppliers need to make will depend on the particular circumstances, but whether that investment is in jointly designing for value and efficient manufacture, improving production and cut planning, powering quality assurance, overcoming a skills gap or effectively managing machinery, the return will be a greater ability to optimise manufacturing rather than simply consume it.
A common fear among both brands and suppliers is that connectivity at the factory floor means a completely open book, with the brand being given full visibility and asked to micromanage production, and the supplier being asked to make unprecedented – and potentially uncomfortable – disclosure. This should not, though, be the objective; rather than targeting full visibility into which sewing operation is taking place at any given time, brands and their partners should instead be aiming to share visibility into collaborative processes and production workflows that allow both parties to respond in a meaningful timeframe to external factors, and drive improved, sustainable outcomes for all parties.
“It’s important to realise that transparency, and the sharing of a single version of the truth, does not have to mean that every piece of information is shared,” Rakhil Hirdaramani explains. “There will always be data solely for factory use, by CEOs, operations managers and production supervisors, and higher-level data that allows factories to better communicate their progress and their constraints to their customers so that both parties have a clear model for achievability. Traditionally, brands have found it difficult to understand what manufacturers’ constraints are, because from the combination of man, material, method and machine, they have only been able to observe and control the material portion. By applying the right specialist technologies, like the ResQ Shopfloor Suite, FastReactPlan, and GSDCost, which all live under the Coats Digital umbrella of business critical solutions, both parties can make strategic decisions based on industry best practice standards and actual factory data. So rather than sharing an outdated report that explains why an order will be late, the brand and the factory can observe live or forward-looking information that demonstrates why it might be late. And, crucially, that visibility will allow for informed decisions to be made about what happens next, driving improved efficiency, speed to market and sustainability.”
This level of mutual understanding is now the ideal that fashion needs to work towards; the external forces that demand it and the internal business cases that prioritise it are clear. The disruption caused by the pandemic may be lessening but it is far from over, and the desire and need for brands to achieve sustainable improvements in margins and speed to market, to ensure continuity, and to gain real, granular insight into the processes of production, is acute.
For factory level visibility to achieve those dual objectives, though, it must be something that brands and their supplier work towards together. And this is where the platforms Hirdaramani mentions become essential to delivering on the real objectives of supply chain visibility and transparency, by providing clear and consistent access to the tools that allow the brand-to-supplier relationship to evolve beyond codes of practices and into true collaboration.
But for those high-level goals to be achievable, visibility needs to start on the factory floor.
Throughout the second half of 2021, The Interline and Coats Digital, with regular inputs from Res.Q will be delving further into how both top-level orchestration and factory-level connectivity will underpin supply chains that are smart, sustainable, and futureproof.
About our partner: Coats Digital is a global provider of business critical software solutions which are embedded with deep industry expertise and proven to digitally transform the way fashion companies design, develop, cost, source and manufacture. Specialist apparel, footwear and textile specific solutions harness industry best practice and the latest technology to improve speed to market, efficiency and sustainability, and are trusted by brands and manufacturers around the world. Follow Coats Digital on LinkedIn.